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Work on airport city to start in 2010

BIAL holding talks with developers; it is seen as revenue-generating venture

The concepts of airport cities and aeronautical SEZs are fast catching on in India

City will form a major chunk of the airport’s non-aeronautical revenues in coming years

CHICKABALLAPUR: Bangalore International Airport Ltd. (BIAL) will begin work on the proposed airport city (aerotropolis) in the first half of 2010.

BIAL is holding talks with developers of the project, sources in BIAL, which operates Bengaluru International Airport at Devanahalli, told The Hindu here on Friday.

BIAL’s decision to develop an airport city is in line with the increasing attention being paid to aerotropolises the world over.

An aerotropolis is a city in which the layout, infrastructure and economy are centred on the airport.

According to sources, the airport city project has provisions for premium land for commercial real-estate development such as office parks, retail, entertainment and hospitality, in addition to the land reserved for a rail link to the city.

BIAL envisions the airport city to be a “flourishing destination in itself; people would not only come here to board flights but also to relax, do business and shop,” sources said.

On the other hand, the airport city project is also an important revenue-generating venture for BIAL, which had suffered a loss of Rs. 22 crore a month when it completed six months of commercial operations in November 2008.

The then Chief Executive Officer of BIAL, Albert Brunner, had hinted at the company’s plans to enter into the real-estate business to augment its revenue in the long run.

Though sources were tight-lipped on BIAL’s latest financial situation, they said, “We have just completed a year of operations and still stabilising.

“However, the bulk revenues will come from aeronautical revenues, of which user development fees (UDF) forms a significant component.

“The Union Government permitted BIAL to collect an ad hoc domestic UDF of Rs. 260 a passenger from January 16, 2009. We are yet awaiting the final UDF amount.”

The concepts of airport cities and aeronautical SEZs, sources said, were fast catching on in India and would form a major chunk of the airport’s non-aeronautical revenues in the coming years.

Large investments are required to create infrastructure such as roads, water supply and a sewage system for the airport city.

The timeframe for them to break even is long and it could take 10 to 15 years to begin yielding profits, the sources said.

However, the airport has been earning revenues from parking, advertising, retail and food and beverage, which are considered traditional forms of non-aeronautical revenue streams, sources said.